Main navigation

The Perils of the MBA

Like millions and millions of Americans, I went to college and accumulated a huge debt load.

Actually, college wasn’t too bad but my graduate education cost a large fortune, and unfortunately for me so far 10 years later have not worked in a field related to my MBA.

As much as I enjoyed my time in California for b-school, I found it very easy and frankly looking back don’t see the value added to corporations to much that I learned. Like thousands of other MBAs I learned a lot of similar information from textbooks and some basic business knowledge.

I really wonder why the MBA has become as common and standard as it has.

It seems like to me it leads to overpaid, underexperienced young people given too much power. And frankly I think has accumulated to the boom and bust cycles causes by bubbles bursting like the tech Internet bubble in the late 1990s. And the mortgage bond insanity that ended with the 2007-2008 financial super crisis and helped start the current massive recession we are still recovering from/living through.

This is why I believe that.

When you give a 26 year old kid with an Harvard MBA and say a BA from Middlebury, 2 years of experience at Goldman Sachs as a junior analyst $200,000 with a $100,000 stock bonus and stock options to be your hotshot new CFO, what does he really know? Likely how to read a spreadsheet, and likely what are the hot trends of the moment.

So if there is tons of profits in tech and website development he moves into that sphere. I saw tons of this with all of the major management consulting firms in the late 1990s.

If there are tons of profits being made with financial engineering and shuffling debt, then you believe that a bunch of high interest, high risk loans are AAA debt, and deserve to be given interest rates not much higher then US treasury bonds. I am not sure why a bunch of C- or CC debt in a massive pile becomes AAA debt, but we saw what happened when that bubble burst in 2008. Easy money made the house prices rise, people took on loans more then they could afford, and when credit was no longer easy to get, house prices and the housing market pummeled.

So what instead of the MBA? Does it have value?

I think the best options would be to actually go for a masters in science in a field and actually study it a hard level. This could be an MS in Marketing, Finance, Accounting (which would also work for CPA), Economics, etc. This should be a more challenging degree that includes a thesis, and isn’t just 1 year in general business, and 1 year in a speciality.

MBAs currently are great in cranking out degrees, and have been extremely profitable for universities.

I am honestly just not sure they are a great degree, for either students or for the companies that hire them.